Merger mania: Are Texas law firms catching the fever?

Once a month, corporate law firm leaders in Texas get a phone call or a visit from competitors headquartered outside the state – sometimes across the ocean – interested in a possible merger.

Partners at nearly all of the state’s large and successful law firms – Bracewell, Gardere, Haynes and Boone, Jackson Walker, Kelly Hart, Locke Lord, Porter Hedges, Thompson & Knight and Winstead – admit that they talk regularly with leaders from firms across the country about potential combinations.

To be sure, most of these discussions have gone nowhere, but legal industry insiders say the Texas business law market has quietly witnessed a significant increase in merger activity during the past three years.

Texas-based corporate law firms – spurred by stagnant demand for legal services and increased competition from national and regional law firms expanding into the state – are on pace in 2017 to record the most corporate law firm mergers in the state’s history.

In fact, many legal industry analysts now predict that the Texas corporate legal market is on the verge of a dramatic consolidation over the next three years.

“No doubt, there will be further consolidation in the legal market in Texas,” Vinson & Elkins Chairman Mark Kelly said in a recent interview. “We have maintained the position that we would listen to offers, but I have no interest in being a 2,000-lawyer firm.”

Other law firm leaders agree.

“I get calls almost weekly seeking a merger,” says Phil Appenzeller, chief executive officer at Munsch Hardt, which has 125 lawyers in Austin, Dallas and Houston. “These are mostly law firms interested in moving into Houston or Dallas, or they already have a small presence here and they want to grow bigger, faster.”

Since Jan. 2016, 22 Texas-based corporate law firms have either acquired or merged with competitors, according to Altman Weil, a national consulting firm that focuses on the legal industry. Another 30 national law practices with offices in Texas also combined with other firms during this period.

The past two years have witnessed several significant mergers involving Texas firms, including: